x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Canada | 98-0355078 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
7550 Ogden Dale Road S.E. Calgary, Alberta, Canada | T2C 4X9 | |
(Address of Principal Executive Offices) | (Zip Code) | |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o | ||||
PART I - FINANCIAL INFORMATION | ||
Page | ||
Item 1. | Financial Statements: | |
Interim Consolidated Statements of Income | ||
For the Three Months Ended March 31, 2019 and 2018 | ||
Interim Consolidated Statements of Comprehensive Income | ||
For the Three Months Ended March 31, 2019 and 2018 | ||
Interim Consolidated Balance Sheets | ||
As at March 31, 2019 and December 31, 2018 | ||
Interim Consolidated Statements of Cash Flows | ||
For the Three Months Ended March 31, 2019 and 2018 | ||
Interim Consolidated Statements of Changes in Shareholders' Equity | ||
For the Three Months Ended March 31, 2019 and 2018 | ||
Notes to Interim Consolidated Financial Statements | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Executive Summary | ||
Performance Indicators | ||
Financial Highlights | ||
Results of Operations | ||
Liquidity and Capital Resources | ||
Share Capital | ||
Non-GAAP Measures | ||
Off-Balance Sheet Arrangements | ||
Contractual Commitments | ||
Critical Accounting Estimates | ||
Forward-Looking Statements | ||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | |
Item 4. | Controls and Procedures | |
PART II - OTHER INFORMATION | ||
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
For the three months ended March 31 | ||||||
(in millions of Canadian dollars, except share and per share data) | 2019 | 2018 | ||||
Revenues (Note 3) | ||||||
Freight | $ | $ | ||||
Non-freight | ||||||
Total revenues | ||||||
Operating expenses | ||||||
Compensation and benefits | ||||||
Fuel | ||||||
Materials | ||||||
Equipment rents | ||||||
Depreciation and amortization | ||||||
Purchased services and other | ||||||
Total operating expenses | ||||||
Operating income | ||||||
Less: | ||||||
Other (income) expense (Note 5) | ( | ) | ||||
Other components of net periodic benefit recovery (Note 13) | ( | ) | ( | ) | ||
Net interest expense | ||||||
Income before income tax expense | ||||||
Income tax expense (Note 6) | ||||||
Net income | $ | $ | ||||
Earnings per share (Note 7) | ||||||
Basic earnings per share | $ | $ | ||||
Diluted earnings per share | $ | $ | ||||
Weighted-average number of shares (millions) (Note 7) | ||||||
Basic | ||||||
Diluted | ||||||
Dividends declared per share | $ | $ | ||||
For the three months ended March 31 | ||||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Net income | $ | $ | ||||
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | ( | ) | ||||
Change in derivatives designated as cash flow hedges | ||||||
Change in pension and post-retirement defined benefit plans | ||||||
Other comprehensive income before income taxes | ||||||
Income tax (expense) recovery on above items | ( | ) | ||||
Other comprehensive income (Note 4) | ||||||
Comprehensive income | $ | $ | ||||
March 31 | December 31 | |||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | $ | ||||
Accounts receivable, net | ||||||
Materials and supplies | ||||||
Other current assets | ||||||
Investments | ||||||
Properties (Note 9) | ||||||
Goodwill and intangible assets | ||||||
Pension asset | ||||||
Other assets (Note 9) | ||||||
Total assets | $ | $ | ||||
Liabilities and shareholders’ equity | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities (Note 9) | $ | $ | ||||
Long-term debt maturing within one year (Note 8, 9, 11) | ||||||
Pension and other benefit liabilities | ||||||
Other long-term liabilities (Note 9) | ||||||
Long-term debt (Note 8, 9, 11) | ||||||
Deferred income taxes | ||||||
Total liabilities | ||||||
Shareholders’ equity | ||||||
Share capital | ||||||
Additional paid-in capital | ||||||
Accumulated other comprehensive loss (Note 4) | ( | ) | ( | ) | ||
Retained earnings | ||||||
Total liabilities and shareholders’ equity | $ | $ | ||||
For the three months ended March 31 | ||||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Operating activities | ||||||
Net income | $ | $ | ||||
Reconciliation of net income to cash provided by operating activities: | ||||||
Depreciation and amortization | ||||||
Deferred income taxes (Note 6) | ||||||
Pension recovery and funding (Note 13) | ( | ) | ( | ) | ||
Foreign exchange (gain) loss on debt and lease liabilities (Note 5) | ( | ) | ||||
Other operating activities, net | ( | ) | ||||
Change in non-cash working capital balances related to operations | ( | ) | ( | ) | ||
Cash provided by operating activities | ||||||
Investing activities | ||||||
Additions to properties | ( | ) | ( | ) | ||
Proceeds from sale of properties and other assets | ||||||
Other | ( | ) | ( | ) | ||
Cash used in investing activities | ( | ) | ( | ) | ||
Financing activities | ||||||
Dividends paid | ( | ) | ( | ) | ||
Issuance of CP Common Shares | ||||||
Purchase of CP Common Shares (Note 10) | ( | ) | ( | ) | ||
Issuance of long-term debt, excluding commercial paper (Note 8) | ||||||
Repayment of long-term debt, excluding commercial paper | ( | ) | ( | ) | ||
Cash provided by (used in) financing activities | ( | ) | ||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | ( | ) | ||||
Cash position | ||||||
Increase (decrease) in cash and cash equivalents | ( | ) | ||||
Cash and cash equivalents at beginning of period | ||||||
Cash and cash equivalents at end of period | $ | $ | ||||
Supplemental disclosures of cash flow information: | ||||||
Income taxes paid | $ | $ | ||||
Interest paid | $ | $ | ||||
(in millions of Canadian dollars except per share data) | Common shares (in millions) | Share capital | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders’ equity | |||||||||||||
Balance at December 31, 2018, as previously reported | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Impact of accounting change (Note 2) | ( | ) | ( | ) | |||||||||||||||
Balance at January 1, 2019, as restated | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Net income | |||||||||||||||||||
Other comprehensive income (Note 4) | |||||||||||||||||||
Dividends declared ($0.6500 per share) | ( | ) | ( | ) | |||||||||||||||
Effect of stock-based compensation expense | |||||||||||||||||||
CP Common Shares repurchased (Note 10) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Shares issued under stock option plan | ( | ) | |||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Balance at January 1, 2018 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Net income | |||||||||||||||||||
Other comprehensive income (Note 4) | |||||||||||||||||||
Dividends declared ($0.5625 per share) | ( | ) | ( | ) | |||||||||||||||
Effect of stock-based compensation expense | |||||||||||||||||||
CP Common Shares repurchased (Note 10) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Shares issued under stock option plan | ( | ) | |||||||||||||||||
Balance at March 31, 2018 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
• | Acceptance of the package of practical expedients, permitting the Company not to reassess lease existence, classification, and capitalization of initial direct costs previously determined for all leases under Topic 840, Leases; |
• | Acceptance of the previous accounting treatment for land easements where Topic 840 was not applied; and |
• | Use of hindsight at transition to determine lease term length. |
(in millions of Canadian dollars) | As reported December 31, 2018 | New lease standard cumulative-effect | As restated January 1, 2019 | ||||||
Assets | |||||||||
Properties | $ | $ | ( | ) | $ | ||||
Other assets | |||||||||
Liabilities | |||||||||
Accounts payable and accrued liabilities | $ | $ | $ | ||||||
Other long-term liabilities | |||||||||
Deferred income taxes | ( | ) | |||||||
Shareholders' equity | |||||||||
Retained earnings | $ | $ | ( | ) | $ | ||||
For the three months ended March 31 | ||||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Freight | ||||||
Grain | $ | $ | ||||
Coal | ||||||
Potash | ||||||
Fertilizers and sulphur | ||||||
Forest products | ||||||
Energy, chemicals and plastics | ||||||
Metals, minerals, and consumer products | ||||||
Automotive | ||||||
Intermodal | ||||||
Total freight revenues | ||||||
Non-freight excluding leasing revenues | ||||||
Revenues from contracts with customers | ||||||
Leasing revenues | ||||||
Total revenues | $ | $ | ||||
For the three months ended March 31 | ||||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Balance at January 1 | $ | $ | ||||
Balance at March 31 | $ | $ | ||||
For the three months ended March 31 | ||||||||||||
(in millions of Canadian dollars) | Foreign currency net of hedging activities(1) | Derivatives and other(1) | Pension and post- retirement defined benefit plans(1) | Total(1) | ||||||||
Opening balance, January 1, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive loss before reclassifications | ( | ) | ( | ) | ( | ) | ||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||
Net other comprehensive income | ||||||||||||
Closing balance, March 31, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Opening balance, January 1, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive income (loss) before reclassifications | ( | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||
Net other comprehensive income | ||||||||||||
Closing balance, March 31, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
For the three months ended March 31 | ||||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Amortization of prior service costs(1) | $ | $ | ( | ) | ||
Recognition of net actuarial loss(1) | ||||||
Total before income tax | ||||||
Income tax recovery | ( | ) | ( | ) | ||
Total net of income tax | $ | $ | ||||
For the three months ended March 31 | ||||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Foreign exchange (gain) loss on debt and lease liabilities | $ | ( | ) | $ | ||
Other foreign exchange gains | ( | ) | ( | ) | ||
Other | ||||||
Other (income) expense | $ | ( | ) | $ | ||
For the three months ended March 31 | ||||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Current income tax expense | $ | $ | ||||
Deferred income tax expense | ||||||
Income tax expense | $ | $ | ||||
For the three months ended March 31 | ||||
(in millions) | 2019 | 2018 | ||
Weighted-average basic shares outstanding | ||||
Dilutive effect of stock options | ||||
Weighted-average diluted shares outstanding | ||||
For the three months ended March 31 | |||
(in millions of Canadian dollars) | 2019 | ||
Operating lease cost | $ | ||
Short-term lease cost | |||
Variable lease cost | |||
Finance Lease Cost | |||
Amortization of right-of use-assets | |||
Interest on lease liabilities | |||
Total lease costs | $ | ||
As at March 31 | |||
(in millions of Canadian dollars) | 2019 | ||
Operating Leases | |||
Other assets | $ | ||
Accounts payable and accrued liabilities | |||
Other long-term liabilities | |||
Finance Leases | |||
Properties, net book value | $ | ||
Long-term debt maturing within one year | |||
Long-term debt | |||
Weighted Average Remaining Lease Term | |||
Operating leases | |||
Finance leases | |||
Weighted Average Discount Rate | |||
Operating leases | % | ||
Finance leases | % | ||
For the three months ended March 31 | |||
(in millions of Canadian dollars) | 2019 | ||
Cash paid for amounts included in measurement of lease liabilities | |||
Operating cash flows from operating leases | $ | ||
Operating cash flows from finance leases | |||
Financing cash flows from finance leases | |||
Right-of-use assets obtained in exchange for lease liabilities | |||
Operating leases | $ | ||
As at March 31, 2019 | |||||||
(in millions of Canadian dollars) | Finance Leases | Operating Leases | |||||
2019 | $ | $ | |||||
2020 | |||||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
Thereafter | |||||||
Total lease payments | $ | $ | |||||
Less: Imputed interest | |||||||
Present value of lease payments | $ | $ | |||||
For the three months ended March 31 | |||||||
2019 | 2018 | ||||||
Number of Common Shares repurchased(1) | |||||||
Weighted-average price per share(2) | $ | $ | |||||
Amount of repurchase (in millions)(2) | $ | $ | |||||
(in millions of Canadian dollars) | March 31, 2019 | December 31, 2018 | ||||
Long-term debt (including current maturities): | ||||||
Fair value | $ | $ | ||||
Carrying value | ||||||
For the three months ended March 31, 2019 | |
Grant price | $ |
Expected option life (years)(1) | |
Risk-free interest rate(2) | |
Expected stock price volatility(3) | |
Expected annual dividends per share(4) | $ |
Expected forfeiture rate(5) | |
Weighted-average grant date fair value per option granted during the period | $ |
(1) | Represents the period of time that awards are expected to be outstanding. Historical data on exercise behaviour or, when available, specific expectations regarding future exercise behaviour was used to estimate the expected life of the option. |
(2) | Based on the implied yield available on zero-coupon government issues with an equivalent term commensurate with the expected term of the option. |
(3) | Based on the historical stock price volatility of the Company’s stock over a period commensurate with the expected term of the option. |
(4) | Determined by the current annual dividend at the time of grant. The Company does not employ different dividend yields throughout the contractual term of the option. |
(5) |
For the three months ended March 31 | |||||||||||||
Pensions | Other benefits | ||||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||
Current service cost (benefits earned by employees) | $ | $ | $ | $ | |||||||||
Other components of net periodic benefit (recovery) cost: | |||||||||||||
Interest cost on benefit obligation | |||||||||||||
Expected return on fund assets | ( | ) | ( | ) | |||||||||
Recognized net actuarial loss | |||||||||||||
Amortization of prior service costs | ( | ) | |||||||||||
Total other components of net periodic benefit (recovery) cost | ( | ) | ( | ) | |||||||||
Net periodic benefit (recovery) cost | $ | ( | ) | $ | ( | ) | $ | $ | |||||
(1) | Québec's Minister of Sustainable Development, Environment, Wildlife and Parks (the "Minister") ordered various parties, including CP, to clean up the derailment site (the “Cleanup Order”). CP appealed the Cleanup Order to the Administrative Tribunal of Québec (the “TAQ”). The Minister subsequently served a Notice of Claim seeking $ |
(2) | Québec’s Attorney General sued CP in the Québec Superior Court initially claiming $ |
(3) | A class action in the Québec Superior Court on behalf of persons and entities residing in, owning or leasing property in, operating a business in or physically present in Lac-Mégantic at the time of the derailment (the “Class Action”) was certified against CP, MMAC and the train conductor, Mr. Thomas Harding ("Harding"). The Class Action seeks unquantified damages, including for wrongful death, personal injury, and property damage arising from the derailment. All known wrongful death claimants in the Class Action have opted out and, by court order, cannot re-join the Class Action. |
(4) |
(5) |
(6) | An adversary proceeding commenced against CP in November 2014 in the Maine Bankruptcy Court by the MMAR U.S. estate representative (“Estate Representative”) accuses CP of failing to abide by certain regulations (the “Adversary Proceeding”). The Estate Representative alleges that CP knew or ought to have known that the shipper had misclassified the petroleum crude oil and therefore should have refused to transport it. The Estate Representative seeks damages for MMAR’s business value (as yet unquantified) allegedly destroyed by the derailment. |
(7) | A class action and mass tort action on behalf of Lac-Mégantic residents and wrongful death representatives commenced in Texas in June 2015 and wrongful death and personal injury actions commenced in Illinois and Maine in June 2015 against CP were all removed and subsequently transferred and consolidated in Federal District Court in Maine (the “Maine Actions”). The Maine Actions allege that CP negligently misclassified and mis-packaged the petroleum crude oil being shipped. On CP’s motion, the Maine Actions were dismissed by the Court on several grounds. The plaintiffs are appealing the dismissal decision. |
(8) | The Trustee (the “WD Trustee”) for the wrongful death trust (the “WD Trust”), as defined and established by the Estate Representative under the Plans, asserts Carmack Amendment claims against CP in North Dakota federal court (the “Carmack Claims”). The WD Trustee seeks to recover approximately $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Revenues | |||||||||||||||
Freight | $ | $ | $ | $ | $ | ||||||||||
Non-freight | ( | ) | |||||||||||||
Total revenues | ( | ) | |||||||||||||
Operating expenses | |||||||||||||||
Compensation and benefits | |||||||||||||||
Fuel | |||||||||||||||
Materials | |||||||||||||||
Equipment rents | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Purchased services and other | ( | ) | |||||||||||||
Total operating expenses | ( | ) | |||||||||||||
Operating income | |||||||||||||||
Less: | |||||||||||||||
Other (income) expense | ( | ) | ( | ) | ( | ) | |||||||||
Other components of net periodic benefit (recovery) expense | ( | ) | ( | ) | |||||||||||
Net interest (income) expense | ( | ) | ( | ) | |||||||||||
Income before income tax expense and equity in net earnings of subsidiaries | |||||||||||||||
Less: Income tax expense | |||||||||||||||
Add: Equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | ||||||||
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Revenues | |||||||||||||||
Freight | $ | $ | $ | $ | $ | ||||||||||
Non-freight | ( | ) | |||||||||||||
Total revenues | ( | ) | |||||||||||||
Operating expenses | |||||||||||||||
Compensation and benefits | |||||||||||||||
Fuel | |||||||||||||||
Materials | |||||||||||||||
Equipment rents | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Purchased services and other | ( | ) | |||||||||||||
Total operating expenses | ( | ) | |||||||||||||
Operating income | |||||||||||||||
Less: | |||||||||||||||
Other expense (income) | ( | ) | |||||||||||||
Other components of net periodic benefit recovery | ( | ) | ( | ) | |||||||||||
Net interest expense (income) | ( | ) | |||||||||||||
(Loss) income before income tax expense and equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Less: Income tax expense | |||||||||||||||
Add: Equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | ||||||||
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | ||||||||
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | ( | ) | |||||||||||||
Change in derivatives designated as cash flow hedges | |||||||||||||||
Change in pension and post-retirement defined benefit plans | |||||||||||||||
Other comprehensive income (loss) before income taxes | ( | ) | |||||||||||||
Income tax expense on above items | ( | ) | ( | ) | |||||||||||
Equity accounted investments | ( | ) | |||||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||
Comprehensive income | $ | $ | $ | $ | ( | ) | $ | ||||||||
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | ||||||||
Net (loss) gain in foreign currency translation adjustments, net of hedging activities | ( | ) | ( | ) | |||||||||||
Change in derivatives designated as cash flow hedges | |||||||||||||||
Change in pension and post-retirement defined benefit plans | |||||||||||||||
Other comprehensive (loss) income before income taxes | ( | ) | |||||||||||||
Income tax recovery on above items | |||||||||||||||
Equity accounted investments | ( | ) | |||||||||||||
Other comprehensive income | ( | ) | |||||||||||||
Comprehensive income | $ | $ | $ | $ | ( | ) | $ | ||||||||
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Assets | |||||||||||||||
Current assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||
Accounts receivable, net | |||||||||||||||
Accounts receivable, intercompany | ( | ) | |||||||||||||
Short-term advances to affiliates | ( | ) | |||||||||||||
Materials and supplies | |||||||||||||||
Other current assets | |||||||||||||||
( | ) | ||||||||||||||
Long-term advances to affiliates | ( | ) | |||||||||||||
Investments | |||||||||||||||
Investments in subsidiaries | ( | ) | |||||||||||||
Properties | |||||||||||||||
Goodwill and intangible assets | |||||||||||||||
Pension asset | |||||||||||||||
Other assets | |||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | ||||||||
Liabilities and shareholders’ equity | |||||||||||||||
Current liabilities | |||||||||||||||
Accounts payable and accrued liabilities | $ | $ | $ | $ | $ | ||||||||||
Accounts payable, intercompany | ( | ) | |||||||||||||
Short-term advances from affiliates | ( | ) | |||||||||||||
Long-term debt maturing within one year | |||||||||||||||
( | ) | ||||||||||||||
Pension and other benefit liabilities | |||||||||||||||
Long-term advances from affiliates | ( | ) | |||||||||||||
Other long-term liabilities | |||||||||||||||
Long-term debt | |||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Total liabilities | ( | ) | |||||||||||||
Shareholders’ equity | |||||||||||||||
Share capital | ( | ) | |||||||||||||
Additional paid-in capital | ( | ) | |||||||||||||
Accumulated other comprehensive (loss) income | ( | ) | ( | ) | ( | ) | |||||||||
Retained earnings | ( | ) | |||||||||||||
( | ) | ||||||||||||||
Total liabilities and shareholders’ equity | $ | $ | $ | $ | ( | ) | $ | ||||||||
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Assets | |||||||||||||||
Current assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||
Accounts receivable, net | |||||||||||||||
Accounts receivable, intercompany | ( | ) | |||||||||||||
Short-term advances to affiliates | ( | ) | |||||||||||||
Materials and supplies | |||||||||||||||
Other current assets | |||||||||||||||
( | ) | ||||||||||||||
Long-term advances to affiliates | ( | ) | |||||||||||||
Investments | |||||||||||||||
Investments in subsidiaries | ( | ) | |||||||||||||
Properties | |||||||||||||||
Goodwill and intangible assets | |||||||||||||||
Pension asset | |||||||||||||||
Other assets | |||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | ||||||||
Liabilities and shareholders’ equity | |||||||||||||||
Current liabilities | |||||||||||||||
Accounts payable and accrued liabilities | $ | $ | $ | $ | $ | ||||||||||
Accounts payable, intercompany | ( | ) | |||||||||||||
Short-term advances from affiliates | ( | ) | |||||||||||||
Long-term debt maturing within one year | |||||||||||||||
( | ) | ||||||||||||||
Pension and other benefit liabilities | |||||||||||||||
Long-term advances from affiliates | ( | ) | |||||||||||||
Other long-term liabilities | |||||||||||||||
Long-term debt | |||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Total liabilities | ( | ) | |||||||||||||
Shareholders’ equity | |||||||||||||||
Share capital | ( | ) | |||||||||||||
Additional paid-in capital | ( | ) | |||||||||||||
Accumulated other comprehensive (loss) income | ( | ) | ( | ) | ( | ) | |||||||||
Retained earnings | ( | ) | |||||||||||||
( | ) | ||||||||||||||
Total liabilities and shareholders’ equity | $ | $ | $ | $ | ( | ) | $ | ||||||||
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Cash provided by operating activities | $ | $ | $ | $ | ( | ) | $ | ||||||||
Investing activities | |||||||||||||||
Additions to properties | ( | ) | ( | ) | ( | ) | |||||||||
Proceeds from sale of properties and other assets | |||||||||||||||
Advances to affiliates | ( | ) | ( | ) | |||||||||||
Repayment of advances to affiliates | ( | ) | |||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Cash provided by (used in) investing activities | ( | ) | ( | ) | ( | ) | |||||||||
Financing activities | |||||||||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | |||||||||
Issuance of CP Common Shares | |||||||||||||||
Purchase of CP Common Shares | ( | ) | ( | ) | |||||||||||
Issuance of long-term debt, excluding commercial paper | |||||||||||||||
Repayment of long-term debt, excluding commercial paper | ( | ) | ( | ) | |||||||||||
Advances from affiliates | ( | ) | |||||||||||||
Repayment of advances from affiliates | ( | ) | |||||||||||||
Cash (used in) provided by financing activities | ( | ) | ( | ) | |||||||||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | ( | ) | ( | ) | |||||||||||
Cash position | |||||||||||||||
Increase in cash and cash equivalents | |||||||||||||||
Cash and cash equivalents at beginning of period | |||||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ | $ | $ | ||||||||||
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Cash provided by operating activities | $ | $ | $ | $ | ( | ) | $ | ||||||||
Investing activities | |||||||||||||||
Additions to properties | ( | ) | ( | ) | ( | ) | |||||||||
Proceeds from sale of properties and other assets | |||||||||||||||
Advances to affiliates | ( | ) | |||||||||||||
Repayment of advances to affiliates | ( | ) | |||||||||||||
Repurchase of share capital from affiliates | ( | ) | |||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Cash (used in) provided by investing activities | ( | ) | ( | ) | ( | ) | |||||||||
Financing activities | |||||||||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Return of share capital to affiliates | ( | ) | |||||||||||||
Issuance of CP Common Shares | |||||||||||||||
Purchase of CP Common Shares | ( | ) | ( | ) | |||||||||||
Repayment of long-term debt, excluding commercial paper | ( | ) | ( | ) | |||||||||||
Advances from affiliates | ( | ) | |||||||||||||
Repayment of advances from affiliates | ( | ) | |||||||||||||
Cash used in financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | |||||||||||||||
Cash position | |||||||||||||||
Decrease in cash and cash equivalents | ( | ) | ( | ) | ( | ) | |||||||||
Cash and cash equivalents at beginning of period | |||||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ | $ | $ | ||||||||||
• | Financial performance - In the first quarter of 2019, CP reported Diluted earnings per share ("EPS") of $3.09, an increase of 28% as compared to the same period of 2018. Net income was $434 million in the first quarter of 2019, an increase of 25% as compared to the same period in 2018. These increases were primarily due to foreign exchange ("FX") translation gains on debt and lease liabilities in 2019. Adjusted diluted EPS, which excludes the FX translation gains on debt and lease liabilities, was $2.79 in the first quarter of 2019, an increase of 3% compared to the same period of 2018. This increase was primarily due to lower average outstanding shares due to the Company’s share repurchase program. |
• | Total revenues - Total revenues increased by 6% in the first quarter of 2019 to $1,767 million from $1,662 million in the same period of 2018. This increase was driven primarily by higher rates and the favourable impact of the change in FX. |
• | Operating performance - CP's average train speed increased by 2% to 21.1 miles per hour due to completion of network infrastructure projects in 2018, partially offset by the impact of harsh winter operating conditions and network disruptions. Average train weight decreased by 1% to 8,868 tons and average train length decreased by 1% to 7,165 feet due to the implementation of CP's winter contingency plan resulting in shorter and lighter trains within the operating plan. These metrics are discussed further in Performance Indicators of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | ||||||
2019 | 2018(1) | % Change | ||||
Operations Performance | ||||||
Gross ton-miles (“GTMs”) (millions) | 64,854 | 64,411 | 1 | |||
Train miles (thousands) | 7,823 | 7,642 | 2 | |||
Average train weight – excluding local traffic (tons) | 8,868 | 8,989 | (1 | ) | ||
Average train length – excluding local traffic (feet) | 7,165 | 7,229 | (1 | ) | ||
Average terminal dwell (hours) | 7.9 | 7.9 | — | |||
Average train speed (miles per hour, or "mph") | 21.1 | 20.6 | 2 | |||
Fuel efficiency (U.S. gallons of locomotive fuel consumed / 1,000 GTMs) | 1.014 | 0.984 | 3 | |||
Total Employees and Workforce | ||||||
Total employees (average) | 12,844 | 12,173 | 6 | |||
Total employees (end of period) | 12,995 | 12,328 | 5 | |||
Workforce (end of period) | 13,037 | 12,398 | 5 | |||
Safety Indicators | ||||||
FRA personal injuries per 200,000 employee-hours | 1.97 | 1.57 | 25 | |||
FRA train accidents per million train-miles | 1.62 | 1.19 | 36 | |||
(1) | Certain figures have been updated to reflect new information or have been revised to conform with current presentation. |
• | A GTM is defined as the movement of one ton of train weight over one mile. GTMs are calculated by multiplying total train weight by the distance the train moved. Total train weight comprises the weight of the freight cars, their contents, and any inactive locomotives. An increase in GTMs indicates additional workload. GTMs increased by 1% in the first quarter of 2019 compared to the same period of 2018. This increase was primarily due to increased volumes of petroleum products, international intermodal, Potash, and Coal, as well as re-routing traffic due to the impact of harsh winter operating conditions and network disruptions. This increase was partially offset by decreased volumes of frac sand, U.S. grain, and crude. |
• | Train miles are defined as the sum of the distance moved by all trains operated on the network. Train miles increased by 2% in the first quarter of 2019 compared to the same period of 2018. This increase reflected the impact of a 1% increase in workload (GTMs) and an increase due to the impact of harsh winter conditions on operating plan productivity. |
• | Average train weight is defined as the average gross weight of CP trains, both loaded and empty. This excludes trains in short-haul service, work trains used to move CP’s track equipment and materials, and the haulage of other railroads’ trains on CP’s network. Average train weight decreased by 1% in the first quarter of 2019 compared to the same period of 2018. This decrease was due to the implementation of CP's winter contingency plan resulting in shorter and lighter trains within the operating plan. |
• | Average train length is defined as the average total length of CP trains, both loaded and empty. This includes all cars and locomotives on the train and is calculated as the sum of each car or locomotive's length multiplied by the distance travelled, divided by train miles. Local trains are excluded from this measure. Average train length decreased by 1% in the first quarter of 2019 compared to the same period of 2018. This decrease was due to the implementation of CP's winter contingency plan resulting in shorter trains within the operating plan. |
• | Average terminal dwell is defined as the average time a freight car resides within terminal boundaries expressed in hours. The timing starts with a train arriving at the terminal, a customer releasing the car to the Company, or a car arriving at interchange from another railroad. The timing ends when the train leaves, a customer receives the car from CP, or the freight car is transferred to another railroad. Freight cars are excluded if they are being stored at the terminal or used in track repairs. Average terminal dwell was unchanged in the first quarter of 2019 compared to the same period of 2018. |
• | Average train speed is defined as a measure of the line-haul movement from origin to destination including terminal dwell hours. It is calculated by dividing the total train miles travelled by the total train hours operated. This calculation does not include delay time related to customers or foreign railroads and excludes the time and distance travelled by: i) trains used in or around CP’s yards; ii) passenger trains; and iii) trains used for repairing track. Average train speed increased by 2% in the first quarter of 2019 compared to the same period of 2018. This increase in speed was due to completion of network infrastructure projects in 2018, partially offset by the impact of harsh winter operating conditions and network disruptions. |
• | Fuel efficiency is defined as U.S. gallons of locomotive fuel consumed per 1,000 GTMs. Fuel efficiency decreased by 3% in the first quarter of 2019 compared to the same period of 2018. This decrease in efficiency was primarily due to decreased train and locomotive productivity as a result of harsh winter conditions and network disruptions. |
For the three months ended March 31 | |||||||
(in millions, except per share data, percentages and ratios) | 2019 | 2018 | |||||
Financial Performance | |||||||
Revenues | $ | 1,767 | $ | 1,662 | |||
Operating income | 543 | 540 | |||||
Net income | 434 | 348 | |||||
Adjusted income(1) | 392 | 390 | |||||
Basic EPS | 3.10 | 2.41 | |||||
Diluted EPS | 3.09 | 2.41 | |||||
Adjusted diluted EPS(1) | 2.79 | 2.70 | |||||
Dividends declared per share | 0.6500 | 0.5625 | |||||
Cash provided by operating activities | 413 | 397 | |||||
Free cash(1) | 193 | 164 | |||||
As at March 31, 2019 | As at December 31, 2018 | ||||||
Financial Position | |||||||
Total assets | $ | 21,910 | $ | 21,254 | |||
Total long-term debt, including current portion | 8,923 | 8,696 | |||||
Shareholders’ equity | 6,814 | 6,636 | |||||
For the twelve months ended March 31 | |||||||
2019 | 2018 | ||||||
Financial Ratios | |||||||
Return on invested capital ("ROIC")(1) | 15.6 | % | 19.5 | % | |||
Adjusted ROIC(1) | 15.9 | % | 14.6 | % | |||
For the three months ended March 31 | |||||||
2019 | 2018 | ||||||
Operating ratio(2) | 69.3 | % | 67.5 | % | |||
(1) | These measures have no standardized meanings prescribed by accounting principles generally accepted in the United States of America ("GAAP") and, therefore, may not be comparable to similar measures presented by other companies. These measures are defined and reconciled in Non-GAAP Measures of this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
(2) | Operating ratio is defined as operating expenses divided by revenues, further discussed in Results of Operations of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | higher freight rates; |
• | lower fuel price; and |
• | the favourable impact of the change in FX of $19 million. |
• | increased operating expense associated with higher casualty costs; |
• | increased weather related costs as a result of harsh winter operating conditions; and |
• | higher stock-based compensation driven primarily by an increase in the stock price. |
• | increased operating expense associated with higher casualty costs; |
• | increased weather related costs as a result of harsh winter operating conditions; and |
• | a higher stock-based compensation driven primarily by an increase in the stock price; |
• | a higher invested capital base due to higher Retained earnings from Net income; |
• | higher Income tax expenses due to income tax recoveries from tax rate changes in the twelve months ended March 31, 2018; and |
• | the unfavourable impact of the change in FX translation on debt and lease liabilities. |
Average exchange rates (Canadian/U.S. dollar) | 2019 | 2018 | ||||
For the three months ended March 31 | $ | 1.33 | $ | 1.27 | ||
Ending Exchange rates (Canadian/U.S. dollar) | 2019 | 2018 | ||||
Beginning of year - January 1 | $ | 1.36 | $ | 1.25 | ||
End of quarter - March 31 | $ | 1.34 | $ | 1.29 | ||
For the three months ended March 31 | ||||||
High/Low exchange rates (Canadian/U.S. dollar) | 2019 | 2018 | ||||
High | $ | 1.36 | $ | 1.31 | ||
Low | $ | 1.31 | $ | 1.23 | ||
Average Fuel Price (U.S. dollars per U.S. gallon) | 2019 | 2018 | ||||
For the three months ended - March 31 | $ | 2.40 | $ | 2.70 | ||
TSX (in Canadian dollars) | 2019 | 2018 | ||||
Opening Common Share price, as at January 1 | $ | 242.24 | $ | 229.66 | ||
Ending Common Share price, as at March 31 | $ | 275.34 | $ | 227.20 | ||
Change in Common Share price for the three months ended March 31 | $ | 33.10 | $ | (2.46 | ) | |
NYSE (in U.S. dollars) | 2019 | 2018 | ||||
Opening Common Share price, as at January 1 | $ | 177.62 | $ | 182.76 | ||
Ending Common Share price, as at March 31 | $ | 206.03 | $ | 176.50 | ||
Change in Common Share price for the three months ended March 31 | $ | 28.41 | $ | (6.26 | ) | |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(2) | |||||||
Freight revenues (in millions)(1) | $ | 1,726 | $ | 1,625 | $ | 101 | 6 | 3 | ||||
Non-freight revenues (in millions) | 41 | 37 | 4 | 11 | 11 | |||||||
Total revenues (in millions) | $ | 1,767 | $ | 1,662 | $ | 105 | 6 | 4 | ||||
Carloads (in thousands) | 635.6 | 649.1 | (13.5 | ) | (2 | ) | N/A | |||||
Revenue ton-miles (in millions) | 36,002 | 36,355 | (353 | ) | (1 | ) | N/A | |||||
Freight revenue per carload (in dollars) | $ | 2,716 | $ | 2,503 | $ | 213 | 9 | 6 | ||||
Freight revenue per revenue ton-mile (in cents) | 4.79 | 4.47 | 0.32 | 7 | 4 | |||||||
(1) | Freight revenues include fuel surcharge revenues of $107 million in 2019 and $101 million in 2018. 2019 and 2018 fuel surcharge revenues include carbon taxes, levies, and obligations recovered under cap-and-trade programs. |
(2) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 380 | $ | 357 | $ | 23 | 6 | 4 | ||||
Carloads (in thousands) | 92.8 | 97.7 | (4.9 | ) | (5 | ) | N/A | |||||
Revenue ton-miles (in millions) | 8,352 | 8,729 | (377 | ) | (4 | ) | N/A | |||||
Freight revenue per carload (in dollars) | $ | 4,089 | $ | 3,650 | $ | 439 | 12 | 9 | ||||
Freight revenue per revenue ton-mile (in cents) | 4.55 | 4.09 | 0.46 | 11 | 8 | |||||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 158 | $ | 151 | $ | 7 | 5 | 3 | ||||
Carloads (in thousands) | 70.4 | 72.8 | (2.4 | ) | (3 | ) | N/A | |||||
Revenue ton-miles (in millions) | 5,232 | 5,218 | 14 | — | N/A | |||||||
Freight revenue per carload (in dollars) | $ | 2,237 | $ | 2,079 | $ | 158 | 8 | 7 | ||||
Freight revenue per revenue ton-mile (in cents) | 3.01 | 2.90 | 0.11 | 4 | 3 | |||||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 114 | $ | 112 | $ | 2 | 2 | (2 | ) | ||||
Carloads (in thousands) | 37.9 | 37.3 | 0.6 | 2 | N/A | ||||||||
Revenue ton-miles (in millions) | 4,573 | 4,381 | 192 | 4 | N/A | ||||||||
Freight revenue per carload (in dollars) | $ | 2,996 | $ | 3,010 | $ | (14 | ) | — | (3 | ) | |||
Freight revenue per revenue ton-mile (in cents) | 2.48 | 2.56 | (0.08 | ) | (3 | ) | (6 | ) | |||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 57 | $ | 61 | $ | (4 | ) | (7 | ) | (8 | ) | ||
Carloads (in thousands) | 13.7 | 14.9 | (1.2 | ) | (8 | ) | N/A | ||||||
Revenue ton-miles (in millions) | 902 | 1,061 | (159 | ) | (15 | ) | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 4,197 | $ | 4,074 | $ | 123 | 3 | — | |||||
Freight revenue per revenue ton-mile (in cents) | 6.38 | 5.74 | 0.64 | 11 | 7 | ||||||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||
Freight revenues (in millions) | $ | 73 | $ | 66 | $ | 7 | 11 | 7 | |||
Carloads (in thousands) | 17.1 | 16.7 | 0.4 | 2 | N/A | ||||||
Revenue ton-miles (in millions) | 1,179 | 1,122 | 57 | 5 | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 4,288 | $ | 3,937 | $ | 351 | 9 | 5 | |||
Freight revenue per revenue ton-mile (in cents) | 6.23 | 5.84 | 0.39 | 7 | 3 | ||||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||
Freight revenues (in millions) | $ | 315 | $ | 257 | $ | 58 | 23 | 18 | |||
Carloads (in thousands) | 78.8 | 74.2 | 4.6 | 6 | N/A | ||||||
Revenue ton-miles (in millions) | 6,359 | 6,157 | 202 | 3 | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 3,998 | $ | 3,468 | $ | 530 | 15 | 12 | |||
Freight revenue per revenue ton-mile (in cents) | 4.96 | 4.18 | 0.78 | 19 | 15 | ||||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 173 | $ | 183 | $ | (10 | ) | (5 | ) | (9 | ) | ||
Carloads (in thousands) | 53.5 | 58.6 | (5.1 | ) | (9 | ) | N/A | ||||||
Revenue ton-miles (in millions) | 2,448 | 2,924 | (476 | ) | (16 | ) | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 3,239 | $ | 3,126 | $ | 113 | 4 | (1 | ) | ||||
Freight revenue per revenue ton-mile (in cents) | 7.07 | 6.27 | 0.80 | 13 | 8 | ||||||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 76 | $ | 71 | $ | 5 | 7 | 3 | |||||
Carloads (in thousands) | 25.1 | 25.5 | (0.4 | ) | (2 | ) | N/A | ||||||
Revenue ton-miles (in millions) | 335 | 305 | 30 | 10 | N/A | ||||||||
Freight revenue per carload (in dollars) | $ | 3,048 | $ | 2,792 | $ | 256 | 9 | 4 | |||||
Freight revenue per revenue ton-mile (in cents) | 22.84 | 23.32 | (0.48 | ) | (2 | ) | (6 | ) | |||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 380 | $ | 367 | $ | 13 | 4 | 2 | |||||
Carloads (in thousands) | 246.3 | 251.4 | (5.1 | ) | (2 | ) | N/A | ||||||
Revenue ton-miles (in millions) | 6,622 | 6,458 | 164 | 3 | N/A | ||||||||
Freight revenue per carload (in dollars) | $ | 1,542 | $ | 1,458 | $ | 84 | 6 | 4 | |||||
Freight revenue per revenue ton-mile (in cents) | 5.74 | 5.68 | 0.06 | 1 | — | ||||||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended March 31 (in millions) | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Compensation and benefits | $ | 406 | $ | 374 | $ | 32 | 9 | 7 | |||||
Fuel | 209 | 215 | (6 | ) | (3 | ) | (7 | ) | |||||
Materials | 57 | 55 | 2 | 4 | 4 | ||||||||
Equipment rents | 35 | 33 | 2 | 6 | — | ||||||||
Depreciation and amortization | 160 | 170 | (10 | ) | (6 | ) | (7 | ) | |||||
Purchased services and other | 357 | 275 | 82 | 30 | 27 | ||||||||
Total operating expenses | $ | 1,224 | $ | 1,122 | $ | 102 | 9 | 7 | |||||
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | increased operating expense associated with higher casualty costs; |
• | increased weather related costs as a result of harsh winter operating conditions; |
• | the unfavourable impact of the change in FX of $25 million; and |
• | higher stock-based compensation driven primarily by an increase in the stock price; |
• | higher stock-based compensation driven primarily by an increase in the stock price; |
• | harsher winter operating conditions; |
• | the unfavourable impact of change in FX of $6 million; and |
• | wage and benefit inflation. |
For the three months ended March 31 (in millions) | 2019 | 2018 | Total Change | % Change | |||||||
Support and facilities | $ | 71 | $ | 66 | $ | 5 | 8 | ||||
Track and operations | 75 | 72 | 3 | 4 | |||||||
Intermodal | 56 | 53 | 3 | 6 | |||||||
Equipment | 32 | 34 | (2 | ) | (6 | ) | |||||
Casualty | 69 | 17 | 52 | 306 | |||||||
Property taxes | 36 | 34 | 2 | 6 | |||||||
Other | 18 | 1 | 17 | 1,700 | |||||||
Land sales | — | (2 | ) | 2 | (100 | ) | |||||
Total Purchased services and other | $ | 357 | $ | 275 | $ | 82 | 30 | ||||
• | higher expenses due to the increased number and severity of casualty incidents, which were the result of difficult weather operating conditions, reported in Casualty; |
• | a $10 million charge associated with a loss contingency, reported in Other; |
• | higher snow removal and other weather related costs reported in Track and operations and Intermodal; |
• | higher legal fees and vehicles repair costs reported in Support and facilities; and |
• | the unfavourable impact of the change in FX of $6 million. |
Long-term debt | Outlook | ||
Standard & Poor's | |||
Long-term corporate credit | BBB+ | stable | |
Senior secured debt | A | stable | |
Senior unsecured debt | BBB+ | stable | |
Moody's | |||
Senior unsecured debt | Baa1 | stable | |
Commercial paper program | |||
Standard & Poor's | A-2 | N/A | |
Moody's | P-2 | N/A | |
• | a non-cash gain of $45 million ($42 million after deferred tax) due to FX translation of debt and lease liabilities that favourably impacted Diluted EPS by 30 cents. |
• | in the second quarter, a deferred tax recovery of $21 million due to reductions in the Missouri and Iowa state tax rates that favourably impacted Diluted EPS by 15 cents; and |
• | during the course of the year, a net non-cash loss of $168 million ($150 million after deferred tax) due to FX translation of debt as follows: |
– | in the fourth quarter, a $113 million loss ($103 million after deferred tax) that unfavourably impacted Diluted EPS by 72 cents; |
– | in the third quarter, a $38 million gain ($33 million after deferred tax) that favourably impacted Diluted EPS by 23 cents; |
– | in the second quarter, a $44 million loss ($38 million after deferred tax) that unfavourably impacted Diluted EPS by 27 cents; and |
– | in the first quarter, a $49 million loss ($42 million after deferred tax) that unfavourably impacted Diluted EPS by 29 cents. |
• | in the second quarter, a charge on hedge roll and de-designation of $13 million ($10 million after deferred tax) that unfavourably impacted Diluted EPS by 7 cents; |
• | in the second quarter, an insurance recovery of a legal settlement of $10 million ($7 million after current tax) that favourably impacted Diluted EPS by 5 cents; |
• | a net deferred tax recovery of $541 million as a result of changes in income tax rates as follows: |
– | in the fourth quarter, a deferred tax recovery of $527 million, primarily due to the U.S. tax reform, that favourably impacted Diluted EPS by $3.63; |
– | in the third quarter, a deferred tax expense of $3 million as a result of the change in the Illinois state corporate income tax rate change that unfavourably impacted Diluted EPS by 2 cents; |
– | in the second quarter, a deferred tax recovery of $17 million as a result of the change in the Saskatchewan provincial corporate income tax rate that favourably impacted Diluted EPS by 12 cents; and |
• | a net non-cash gain of $158 million ($138 million after deferred tax) due to FX translation of debt as follows: |
– | in the fourth quarter, a $14 million loss ($12 million after deferred tax) that unfavourably impacted Diluted EPS by 8 cents; |
– | in the third quarter, a $105 million gain ($91 million after deferred tax) that favourably impacted Diluted EPS by 62 cents; and |
– | in the second quarter, a $67 million gain ($59 million after deferred tax) that favourably impacted Diluted EPS by 40 cents. |
For the three months ended March 31 | ||||||
(in millions) | 2019 | 2018 | ||||
Net income as reported | $ | 434 | $ | 348 | ||
Less significant items (pretax): | ||||||
Impact of FX translation on debt and lease liabilities | 45 | (49 | ) | |||
Add: | ||||||
Tax effect of adjustments(1) | 3 | (7 | ) | |||
Adjusted income | $ | 392 | $ | 390 | ||
For the three months ended March 31 | ||||||
2019 | 2018 | |||||
Diluted earnings per share as reported | $ | 3.09 | $ | 2.41 | ||
Less significant items (pretax): | ||||||
Impact of FX translation on debt and lease liabilities | 0.32 | (0.34 | ) | |||
Add: | ||||||
Tax effect of adjustments(1) | 0.02 | (0.05 | ) | |||
Adjusted diluted earnings per share | $ | 2.79 | $ | 2.70 | ||
For the twelve months ended March 31 | ||||||
(in millions, except for percentages) | 2019 | 2018 | ||||
Operating income as reported | $ | 2,834 | $ | 2,455 | ||
Less: | ||||||
Other expense (income) | 76 | (99 | ) | |||
Other components of net periodic benefit recovery | (385 | ) | (303 | ) | ||
Tax(1) | 764 | 86 | ||||
$ | 2,379 | $ | 2,771 | |||
Average of total shareholders' equity, long-term debt, long-term debt maturing within one year and short-term borrowing | 15,264 | 14,222 | ||||
ROIC | 15.6 | % | 19.5 | % | ||
For the twelve months ended March 31 | ||||||
(in millions, except for percentages) | 2019 | 2018 | ||||
Operating income as reported | $ | 2,834 | $ | 2,455 | ||
Less: | ||||||
Other expense (income) | 76 | (99 | ) | |||
Other components of net periodic benefit recovery | (385 | ) | (303 | ) | ||
Add significant items (pretax): | ||||||
Insurance recovery of legal settlement | — | (10 | ) | |||
Charge on hedge roll and de-designation | — | 13 | ||||
Impact of FX translation on debt and lease liabilities | 74 | (109 | ) | |||
Less: | ||||||
Tax(1) | 796 | 716 | ||||
$ | 2,421 | $ | 2,035 | |||
Average for the twelve months of total shareholders' equity, long-term debt, long-term debt maturing within one year and short-term borrowing | 15,264 | 14,222 | ||||
Add: | ||||||
Impact of periodic significant items net of tax on the above average | (11 | ) | (269 | ) | ||
Adjusted average for the twelve months of total shareholders' equity, long-term debt, long-term debt maturing within one year and short-term borrowing | 15,253 | 13,953 | ||||
Adjusted ROIC | 15.9 | % | 14.6 | % | ||
For the three months ended March 31 | ||||||
(in millions) | 2019 | 2018 | ||||
Cash provided by operating activities | $ | 413 | $ | 397 | ||
Cash used in investing activities | (219 | ) | (238 | ) | ||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | (1 | ) | 5 | |||
Free cash | $ | 193 | $ | 164 | ||
For the three months ended March 31 | ||||||||||||||
(in millions) | Reported 2019 | Reported 2018 | Variance due to FX | FX Adjusted 2018 | FX Adjusted % Change | |||||||||
Freight revenues by line of business | ||||||||||||||
Grain | $ | 380 | $ | 357 | $ | 10 | $ | 367 | 4 | |||||
Coal | 158 | 151 | 2 | 153 | 3 | |||||||||
Potash | 114 | 112 | 4 | 116 | (2 | ) | ||||||||
Fertilizers & sulphur | 57 | 61 | 1 | 62 | (8 | ) | ||||||||
Forest products | 73 | 66 | 2 | 68 | 7 | |||||||||
Energy, chemicals & plastics | 315 | 257 | 9 | 266 | 18 | |||||||||
Metals, minerals & consumer products | 173 | 183 | 8 | 191 | (9 | ) | ||||||||
Automotive | 76 | 71 | 3 | 74 | 3 | |||||||||
Intermodal | 380 | 367 | 5 | 372 | 2 | |||||||||
Freight revenues | 1,726 | 1,625 | 44 | 1,669 | 3 | |||||||||
Non-freight revenues | 41 | 37 | — | 37 | 11 | |||||||||
Total revenues | $ | 1,767 | $ | 1,662 | $ | 44 | $ | 1,706 | 4 | |||||
For the three months ended March 31 | ||||||||||||||
(in millions) | Reported 2019 | Reported 2018 | Variance due to FX | FX Adjusted 2018 | FX Adjusted % Change | |||||||||
Compensation and benefits | $ | 406 | $ | 374 | $ | 6 | $ | 380 | 7 | |||||
Fuel | 209 | 215 | 9 | 224 | (7 | ) | ||||||||
Materials | 57 | 55 | — | 55 | 4 | |||||||||
Equipment rents | 35 | 33 | 2 | 35 | — | |||||||||
Depreciation and amortization | 160 | 170 | 2 | 172 | (7 | ) | ||||||||
Purchased services and other | 357 | 275 | 6 | 281 | 27 | |||||||||
Total operating expenses | $ | 1,224 | $ | 1,122 | $ | 25 | $ | 1,147 | 7 | |||||
For the twelve months ended March 31 | ||||||
(in millions) | 2019 | 2018 | ||||
Net income as reported | $ | 2,037 | $ | 2,322 | ||
Add: | ||||||
Net interest expense | 452 | 468 | ||||
Income tax expense | 654 | 67 | ||||
EBIT | 3,143 | 2,857 | ||||
Less significant items (pretax): | ||||||
Insurance recovery of legal settlement | — | 10 | ||||
Charge on hedge roll and de-designation | — | (13 | ) | |||
Impact of FX translation on debt and lease liabilities | (74 | ) | 109 | |||
Adjusted EBIT | 3,217 | 2,751 | ||||
Less: | ||||||
Other components of net periodic benefit recovery | 385 | 303 | ||||
Operating lease expense | (97 | ) | (98 | ) | ||
Depreciation and amortization | (686 | ) | (665 | ) | ||
Adjusted EBITDA | $ | 3,615 | $ | 3,211 | ||
(in millions) | 2019 | 2018 | ||||
Long-term debt including long-term debt maturing within one year as at March 31 | $ | 8,923 | $ | 8,357 | ||
Less: | ||||||
Pension plans in deficit(1) | (265 | ) | (278 | ) | ||
Operating lease liabilities(2) | (386 | ) | (276 | ) | ||
Cash and cash equivalents | 352 | 125 | ||||
Adjusted net debt as at March 31 | $ | 9,222 | $ | 8,786 | ||
(in millions, except for ratios) | 2019 | 2018 | ||||
Adjusted net debt as at March 31 | $ | 9,222 | $ | 8,786 | ||
Adjusted EBITDA for the year ended March 31 | 3,615 | 3,211 | ||||
Adjusted net debt to Adjusted EBITDA ratio | 2.6 | 2.7 | ||||
Payments due by period (in millions) | Total | 2019 | 2020 & 2021 | 2022 & 2023 | 2024 & beyond | ||||||||||
Contractual commitments | |||||||||||||||
Interest on long-term debt and finance leases | $ | 11,747 | $ | 304 | $ | 879 | $ | 749 | $ | 9,815 | |||||
Long-term debt | 8,858 | 487 | 441 | 984 | 6,946 | ||||||||||
Finance leases | 155 | 4 | 11 | 115 | 25 | ||||||||||
Operating lease(1) | 444 | 67 | 125 | 98 | 154 | ||||||||||
Supplier purchase | 686 | 122 | 149 | 124 | 291 | ||||||||||
Other long-term liabilities(2) | 490 | 42 | 105 | 102 | 241 | ||||||||||
Total contractual commitments | $ | 22,380 | $ | 1,026 | $ | 1,710 | $ | 2,172 | $ | 17,472 | |||||
Payments due by period (in millions) | Total | 2019 | 2020 & 2021 | 2022 & 2023 | 2024 & beyond | ||||||||||
Certain other financial commitments | |||||||||||||||
Letters of credit | $ | 59 | $ | 59 | $ | — | $ | — | $ | — | |||||
Capital commitments | 845 | 569 | 94 | 66 | 116 | ||||||||||
Total certain other financial commitments | $ | 904 | $ | 628 | $ | 94 | $ | 66 | $ | 116 | |||||
2019 | Total Number of Shares Purchased(1) | Average Price Paid per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | |||||
January 1 to January 31 | 377,882 | $ | 253.77 | 377,882 | 3,117,858 | ||||
February 1 to February 28 | 205,895 | 269.44 | 205,895 | 2,911,963 | |||||
March 1 to March 31 | 123,901 | 273.19 | 123,901 | 2,788,062 | |||||
Ending Balance | 707,678 | $ | 261.73 | 707,678 | N/A | ||||
Exhibit | Description |
101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH* | XBRL Taxonomy Extension Schema Document |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
The following financial information from Canadian Pacific Railway Limited's Quarterly Report on Form 10-Q for the first quarter ended March 31, 2019, formatted in Extensible Business Reporting Language (XBRL) includes: (i) the Interim Consolidated Statements of Income for the first three months ended March 31, 2019 and 2018; (ii) the Interim Consolidated Statements of Comprehensive Income for the first three months ended March 31, 2019 and 2018; (iii) the Interim Consolidated Balance Sheets at March 31, 2019, and December 31, 2018; (iv) the Interim Consolidated Statements of Cash Flows for the first three months ended March 31, 2019 and 2018; (v) the Interim Consolidated Statements of Changes in Shareholders’ Equity for the first three months ended March 31, 2019 and 2018; and (vi) the Notes to Interim Consolidated Financial Statements. | |
CANADIAN PACIFIC RAILWAY LIMITED | |
(Registrant) | |
By: | /s/ NADEEM VELANI |
Nadeem Velani | |
Executive Vice-President and Chief Financial Officer (Principal Financial Officer) | |
TO: | Computershare Trust Company of Canada |
AND TO: | Blake, Cassels & Graydon LLP |
CANADIAN PACIFIC RAILWAY COMPANY | |
By: | /s/ Nadeem Velani | |
Name: | Nadeem Velani | |
Title: | Executive Vice-President and Chief Financial Officer | |
By: | /s/ Chris De Bruyn | |
Name: | Chris De Bruyn | |
Title: | Director Investor Relations and Treasury | |
1.1 | Redemption Provisions |
1.2 | Covenant Relating to the Notes |
(a) | accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; |
(b) | deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and |
(c) | deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer's Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased. |
1.3 | Definitions Relating to the Notes |
1.4 | Guarantee |
1.5 | Terms Schedule Deemed to Form Part of the Trust Indenture |
1.6 | Definitions in the Trust Indenture |
1.7 | Interpretation Not Affected by Headings |
1.8 | Date of Terms Schedule |
1. | I have reviewed this Quarterly Report on Form 10-Q of Canadian Pacific Railway Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: April 23, 2019 | /s/ KEITH CREEL | |
Keith Creel | ||
President and Chief Executive Officer | ||
1. | I have reviewed this Quarterly Report on Form 10-Q of Canadian Pacific Railway Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: April 23, 2019 | /s/ NADEEM VELANI | |
Nadeem Velani | ||
Executive Vice-President and Chief Financial Officer | ||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 23, 2019 | /s/ KEITH CREEL | |||
Keith Creel | ||||
President and Chief Executive Officer | ||||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 23, 2019 | /s/ NADEEM VELANI | |||
Nadeem Velani | ||||
Executive Vice-President and Chief Financial Officer | ||||
Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Apr. 22, 2019 |
|
| Document And Entity Information [Abstract] | ||
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | Mar. 31, 2019 | |
| Document Fiscal Year Focus | 2019 | |
| Document Fiscal Period Focus | Q1 | |
| Trading Symbol | CP | |
| Entity Registrant Name | CANADIAN PACIFIC RAILWAY LTD/CN | |
| Entity Central Index Key | 0000016875 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Current Reporting Status | Yes | |
| Entity Common Stock, Shares Outstanding | 139,824,714 | |
| Entity Emerging Growth Company | false | |
| Entity Small Business | false |
INTERIM CONSOLIDATED STATEMENTS OF INCOME (unaudited) - CAD ($) shares in Millions, $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Revenues | ||
| Total revenues | $ 1,767 | $ 1,662 |
| Operating expenses | ||
| Compensation and benefits | 406 | 374 |
| Fuel | 209 | 215 |
| Materials | 57 | 55 |
| Equipment rents | 35 | 33 |
| Depreciation and amortization | 160 | 170 |
| Purchased services and other | 357 | 275 |
| Total operating expenses | 1,224 | 1,122 |
| Operating income | 543 | 540 |
| Less: | ||
| Other (income) expense | (47) | 51 |
| Other components of net periodic benefit recovery | (97) | (96) |
| Net interest expense | 114 | 115 |
| Income before income tax expense | 573 | 470 |
| Income tax expense | 139 | 122 |
| Net income | $ 434 | $ 348 |
| Earnings per share | ||
| Basic earnings per share | $ 3.10 | $ 2.41 |
| Diluted earnings per share | $ 3.09 | $ 2.41 |
| Weighted-average number of shares (millions) | ||
| Basic | 140.1 | 144.4 |
| Diluted | 140.5 | 144.8 |
| Dividends declared per share | $ 0.6500 | $ 0.5625 |
| Freight [Member] | ||
| Revenues | ||
| Total revenues | $ 1,726 | $ 1,625 |
| Non-Freight [Member] | ||
| Revenues | ||
| Total revenues | $ 41 | $ 37 |
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - CAD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Statement of Comprehensive Income [Abstract] | ||
| Net income | $ 434 | $ 348 |
| Net gain (loss) in foreign currency translation adjustments, net of hedging activities | 16 | (20) |
| Change in derivatives designated as cash flow hedges | 2 | 21 |
| Change in pension and post-retirement defined benefit plans | 20 | 29 |
| Other comprehensive income (loss) before income taxes | 38 | 30 |
| Income tax (expense) recovery on above items | (22) | 6 |
| Other comprehensive income (loss) | 16 | 36 |
| Comprehensive income | $ 450 | $ 384 |
Basis of Presentation |
3 Months Ended |
|---|---|
Mar. 31, 2019 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | These unaudited interim consolidated financial statements of Canadian Pacific Railway Limited (“CP”, or “the Company”), expressed in Canadian dollars, reflect management’s estimates and assumptions that are necessary for their fair presentation in conformity with generally accepted accounting principles in the United States of America (“GAAP”). They do not include all disclosures required under GAAP for annual financial statements and should be read in conjunction with the 2018 annual consolidated financial statements and notes included in CP's 2018 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2018 annual consolidated financial statements, except for the newly adopted accounting policy discussed in Note 2. CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues. This seasonality could impact quarter-over-quarter comparisons. |
Accounting Changes |
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| New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Changes | Implemented in 2019 Leases On January 1, 2019, the Company adopted the new Accounting Standards Update ("ASU") 2016-02, issued by the Financial Accounting Standards Board ("FASB"), and all related amendments under FASB Accounting Standards Codification ("ASC") Topic 842, Leases. Using the cumulative-effect adjustment transition approach, the Company recognized a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Accordingly, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. In January 2019, the Company adapted existing internal controls and implemented a lease management system to assist in delivering the required accounting changes. To facilitate the transition, the Company made policy choices to utilize available practical expedients provided by the new standard, including the:
Finance leases were transitioned with no significant changes to existing balances. Operating leases with fixed terms and in-substance fixed terms were transitioned by recognizing both an operating lease liability and right-of-use ("ROU") asset. Operating lease liabilities and ROU assets were calculated at the present value of remaining lease payments using the Company’s incremental borrowing interest rate as at January 1, 2019. ROU assets were further modified to include previously accrued balances for prepayments and initial direct costs, but reduced for accrued lease incentives. The Company did not recognize operating lease liabilities or ROU assets for leases requiring variable payment not dependent on an index or rate, or short term leases with a term of 12 months or less. The standard had a material impact on the Company's Interim Consolidated Balance Sheets, but did not have a significant impact on its Interim Consolidated Statements of Income. The most significant impact was the recognition of operating lease ROU assets and operating lease liabilities, while the Company's accounting of finance leases remained substantially unchanged. The impact of the adoption of ASC 842 as at January 1, 2019 is as follows:
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Revenue Recognition |
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| Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition | The following table disaggregates the Company’s revenues from contracts with customers by major source:
Contract liabilities
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Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component |
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| Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in Accumulated Other Comprehensive Loss (AOCL) by Component |
(1) Amounts are presented net of tax. Amounts in Pension and post-retirement defined benefit plans reclassified from AOCL are as follows:
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Other (Income) Expense |
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| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income and Expenses |
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Income Taxes |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes |
The effective tax rates for the three months ended March 31, 2019 was 24.24%, compared to 25.92% for the same period in 2018. For the three months ended March 31, 2019, the effective tax rate excluding the discrete item of the foreign exchange ("FX") gain of $45 million on debt and lease liabilities, was 25.75%. |
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Earnings Per Share |
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| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||
| Earnings Per Share | At March 31, 2019, the number of shares outstanding was 139.8 million (March 31, 2018 - 143.7 million). Basic earnings per share have been calculated using net income for the period divided by the weighted-average number of shares outstanding during the period. The number of shares used in earnings per share calculations is reconciled as follows:
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Debt |
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Mar. 31, 2019 | |
| Debt Disclosure [Abstract] | |
| Debt | Issuance of long-term debt |
Leases |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases of Lessee Disclosure [Text Block] | The Company has operating leases for rolling stock, buildings, vehicles, railway equipment, and roadway machines, and finance leases for rolling stock. CP has entered into rolling stock leases that are fully variable or contain both fixed and variable components. Variable components are dependent on the hours and miles that the underlying equipment has been used. Fixed term, short-term, and variable operating lease costs are recorded in Equipment rents and Purchased services and other on the Company's Interim Consolidated Income Statements. Components of finance lease costs are recorded in Depreciation and amortization and Net interest expense on the Company's Interim Consolidated Income Statements. The Company determines lease existence and classification at the lease inception date. Leases are identified when an agreement conveys the right to control identified property for a period of time in exchange for consideration. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating leases are included in Other assets, Accounts payable and accrued liabilities, and Other long-term liabilities on the Company's Interim Consolidated Balance Sheets. Finance leases are included in Properties, Long-term debt maturing within one year, and Long-term debt on the Company's Interim Consolidated Balance Sheets. Operating and finance lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments include fixed and variable payments that are based on an index or a rate. As most of the Company's leases do not provide a readily determinable implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Operating and finance lease ROU assets also include lease prepayments and initial direct costs, but are reduced by lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise these options. The Company’s leases have remaining terms from one to 12 years, some of which include options to extend for up to an additional 10 years and some of which include options to terminate within one year. The Company has short-term operating leases with terms of 12 months or less, some of which include options to purchase that the Company is not reasonably certain to exercise. The Company has elected to apply the recognition exemption and, as such, accounts for leases with a term of 12 months or less off-balance sheet. Therefore, lease payments on these short-term operating leases are not included in operating lease ROU assets and liabilities, but are recognized as an expense in the Company's Consolidated Statements of Income on a straight-line basis over the term of the lease. Further, the Company has elected to combine lease and non-lease components for all leases, except for leases of roadway machines. Residual value guarantees are provided on certain rolling stock and vehicle operating leases. Cumulatively, these guarantees are limited to $2 million and are not included in lease liabilities as it is not currently probable that any amounts will be owed under these residual value guarantees. The components of lease expense are as follows:
Supplemental balance sheet information related to leases is as follows:
Supplemental information related to leases is as follows:
Maturities of lease liabilities are as follows:
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Shareholders' Equity |
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' Equity | On October 19, 2018, the Company announced a new normal course issuer bid ("NCIB"), commencing October 24, 2018, to purchase up to 5.68 million of its Common Shares in the open market for cancellation before October 23, 2019. As at March 31, 2019, the Company had purchased 2.89 million Common Shares for $753 million under this NCIB program. On May 10, 2017, the Company announced a new NCIB, commencing May 15, 2017, to purchase up to 4.38 million Common Shares for cancellation before May 14, 2018. The Company completed this NCIB on May 10, 2018. All purchases were made in accordance with the NCIB at prevalent market prices plus brokerage fees, or such other prices that were permitted by the Toronto Stock Exchange, with consideration allocated to share capital up to the average carrying amount of the shares, and any excess allocated to retained earnings. The following table describes activities under the share repurchase program:
(1) Includes shares repurchased but not yet canceled at quarter end. (2) Includes brokerage fees.
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Financial Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments | A. Fair values of financial instruments The Company categorizes its financial assets and liabilities measured at fair value into a three-level hierarchy established by GAAP that prioritizes those inputs to valuation techniques used to measure fair value based on the degree to which they are observable. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices in active markets for identical assets and liabilities; Level 2 inputs, other than quoted prices included within Level 1, are observable for the asset or liability either directly or indirectly; and Level 3 inputs are not observable in the market. When possible, the estimated fair value is based on quoted market prices and, if not available, it is based on estimates from third party brokers. For non-exchange-traded derivatives classified in Level 2, the Company uses standard valuation techniques to calculate fair value. Primary inputs to these techniques include observable market prices (interest, FX and commodity) and volatility, depending on the type of derivative and the nature of the underlying risk. The Company uses inputs and data used by willing market participants when valuing derivatives and considers its own credit default swap spread as well as those of its counterparties in its determination of fair value. All derivatives and long-term debt are classified as Level 2. The carrying values of financial instruments equal or approximate their fair values with the exception of long-term debt:
The estimated fair value of current and long-term borrowings has been determined based on market information where available, or by discounting future payments of principal and interest at estimated interest rates expected to be available to the Company at period end. B. Financial risk management Derivative financial instruments Derivative financial instruments may be used to selectively reduce volatility associated with fluctuations in interest rates, FX rates, the price of fuel and stock-based compensation expense. Where derivatives are designated as hedging instruments, the relationship between the hedging instruments and their associated hedged items is documented, as well as the risk management objective and strategy for the use of the hedging instruments. This documentation includes linking the derivatives that are designated as fair value or cash flow hedges to specific assets or liabilities on the Company's Interim Consolidated Balance Sheets, commitments or forecasted transactions. At the time a derivative contract is entered into and at least quarterly thereafter, an assessment is made as to whether the derivative item is effective in offsetting the changes in fair value or cash flows of the hedged items. The derivative qualifies for hedge accounting treatment if it is effective in substantially mitigating the risk it was designed to address. It is not the Company’s intent to use financial derivatives or commodity instruments for trading or speculative purposes. FX management The Company conducts business transactions and owns assets in both Canada and the United States. As a result, the Company is exposed to fluctuations in the value of financial commitments, assets, liabilities, income or cash flows due to changes in FX rates. The Company may enter into FX risk management transactions primarily to manage fluctuations in the exchange rate between Canadian and U.S. currencies. FX exposure is primarily mitigated through natural offsets created by revenues, expenditures and balance sheet positions incurred in the same currency. Where appropriate, the Company may negotiate with customers and suppliers to reduce the net exposure. Net investment hedge The FX gains and losses on long-term debt are mainly unrealized and can only be realized when U.S. dollar-denominated long-term debt matures or is settled. The Company also has long-term FX exposure on its investment in U.S. affiliates. The majority of the Company’s U.S. dollar-denominated long-term debt has been designated as a hedge of the net investment in foreign subsidiaries. This designation has the effect of mitigating volatility on Net income by offsetting long-term FX gains and losses on U.S. dollar-denominated long-term debt and gains and losses on its net investment. The effect of the net investment hedge recognized in “Other comprehensive income” for the three months ended March 31, 2019 was an unrealized FX gain of $120 million (three months ended March 31, 2018 - unrealized FX loss of $151 million). Interest rate management The Company is exposed to interest rate risk, which is the risk that the fair value or future cash flows of a financial instrument will vary as a result of changes in market interest rates. In order to manage funding needs or capital structure goals, the Company enters into debt or capital lease agreements that are subject to either fixed market interest rates set at the time of issue or floating rates determined by ongoing market conditions. Debt subject to variable interest rates exposes the Company to variability in interest expense, while debt subject to fixed interest rates exposes the Company to variability in the fair value of debt. To manage interest rate exposure, the Company accesses diverse sources of financing and manages borrowings in line with a targeted range of capital structure, debt ratings, liquidity needs, maturity schedule, and currency and interest rate profiles. In anticipation of future debt issuances, the Company may enter into forward rate agreements, that are designated as cash flow hedges, to substantially lock in all or a portion of the effective future interest expense. The Company may also enter into swap agreements, designated as fair value hedges, to manage the mix of fixed and floating rate debt. Forward starting swaps During the second quarter of 2018, the Company settled a notional U.S. $500 million of forward starting swaps related to the U.S. $500 million 4.000% 10-year Notes issued in the same period. The fair value of these derivative instruments at the time of settlement was a loss of U.S. $19 million ($24 million). The changes in fair value from the forward starting swaps for the three months ended March 31, 2019 was $nil (three months ended March 31, 2018 - gain of $19 million). This was recorded in "Accumulated other comprehensive loss”, net of tax, and is being reclassified to "Net interest expense" on the Interim Consolidated Statements of Income until the underlying hedged notes are repaid. |
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Stock-Based Compensation |
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | At March 31, 2019, the Company had several stock-based compensation plans, including stock option plans, various cash settled liability plans and an employee share purchase plan. These plans resulted in an expense for the three months ended March 31, 2019 of $34 million (three months ended March 31, 2018 - an expense of $14 million). Stock option plan In the three months ended March 31, 2019, under CP’s stock option plans, the Company issued 215,537 options at the weighted-average price of $271.84 per share, based on the closing price on the grant date. Pursuant to the employee plan, these options may be exercised upon vesting, which is between 12 months and 48 months after the grant date, and will expire after seven years. Under the fair value method, the fair value of the stock options at the grant date was approximately $14 million. The weighted-average fair value assumptions were approximately:
Performance share unit plan In the three months ended March 31, 2019, the Company issued 128,010 PSUs with a grant date fair value of approximately $34 million. These units attract dividend equivalents in the form of additional units based on the dividends paid on the Company’s Common Shares. PSUs vest and are settled in cash or in CP Common Shares, approximately three years after the grant date, contingent upon CP’s performance ("performance factor"). The fair value of these PSUs is measured periodically until settlement, using either a lattice-based valuation model or a Monte Carlo simulation model. The performance period for 127,431 PSUs issued in the three months ended March 31, 2019 is January 1, 2019 to December 31, 2021, and the performance factors for these PSUs are Return on Invested Capital ("ROIC"), Total Shareholder Return ("TSR") compared to the S&P/TSX 60 Index, and TSR compared to Class I Railways. The performance factors for the remaining 579 PSUs are annual revenue for the fiscal year 2020, diluted EPS for the fiscal year 2020, and share price appreciation. The performance period for the PSUs issued in 2016 was January 1, 2016 to December 31, 2018. The performance factors for these PSUs were Operating Ratio, ROIC, TSR compared to the S&P/TSX 60 index, and TSR compared to Class I railways. The resulting payout was 177% of the outstanding units multiplied by the Company's average share price that was calculated using the last 30 trading days preceding December 31, 2018. In the first quarter of 2019, payouts occurred on the total outstanding awards, including dividends reinvested, totaling $54 million on 117,228 outstanding awards. Deferred share unit plan |
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Pensions and Other Benefits |
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pensions and Other Benefits | In the three months ended March 31, 2019, the Company made contributions of $11 million (three months ended March 31, 2018 - $1 million, which is net of a $10 million refund of plan surplus) to its defined benefit pension plans. Net periodic benefit costs for defined benefit pension plans and other benefits recognized in the three months ended March 31, 2019 and 2018 included the following components:
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Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
| Contingencies | In the normal course of its operations, the Company becomes involved in various legal actions, including claims relating to injuries and damage to property. The Company maintains provisions it considers to be adequate for such actions. While the final outcome with respect to actions outstanding or pending at March 31, 2019 cannot be predicted with certainty, it is the opinion of management that their resolution will not have a material adverse effect on the Company’s financial position or results of operations. Legal proceedings related to Lac-Mégantic rail accident On July 6, 2013, a train carrying petroleum crude oil operated by Montreal Maine and Atlantic Railway (“MMAR”) or a subsidiary, Montreal Maine & Atlantic Canada Co. (“MMAC” and collectively the “MMA Group”), derailed in Lac-Mégantic, Québec. The derailment occurred on a section of railway owned and operated by the MMA Group. The previous day, CP had interchanged the train to the MMA Group, and after the interchange, the MMA Group exclusively controlled the train. In the wake of the derailment, MMAC sought court protection in Canada under the Companies’ Creditors Arrangement Act, R.S.C., 1985, c. C-36 and MMAR filed for bankruptcy in the United States. Plans of arrangement have been approved in both Canada and the U.S. (the “Plans”). These Plans provide for the distribution of a fund of approximately $440 million amongst those claiming derailment damages. A number of legal proceedings, set out below, were commenced after the derailment in Canada and/or in the U.S. against CP and others:
The Province’s Action, the Class Action and the Promutuel Action have been consolidated and will proceed together through the litigation process in the Québec Superior Court. While each Action will remain a separate legal proceeding, there will be a trial to determine liability issues commencing mid-September 2020, and subsequently, if necessary, a trial to determine damages issues.
At this stage of the proceedings, any potential responsibility and the quantum of potential losses cannot be determined. Nevertheless, CP denies liability and is vigorously defending the above noted proceedings. Environmental liabilities Environmental remediation accruals, recorded on an undiscounted basis unless a reliable, determinable estimate as to an amount and timing of costs can be established, cover site-specific remediation programs. The accruals for environmental remediation represent CP’s best estimate of its probable future obligation and include both asserted and unasserted claims, without reduction for anticipated recoveries from third parties. Although the recorded accruals include CP’s best estimate of all probable costs, CP’s total environmental remediation costs cannot be predicted with certainty. Accruals for environmental remediation may change from time to time as new information about previously untested sites becomes known, and as environmental laws and regulations evolve and advances are made in environmental remediation technology. The accruals may also vary as the courts decide legal proceedings against outside parties responsible for contamination. These potential charges, which cannot be quantified at this time, may materially affect income in the particular period in which a charge is recognized. Costs related to existing, but as yet unknown, or future contamination will be accrued in the period in which they become probable and reasonably estimable. |
Condensed Consolidating Financial Information |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidating Financial Information | Canadian Pacific Railway Company, a 100%-owned subsidiary of Canadian Pacific Railway Limited (“CPRL”), is the issuer of certain debt securities, which are fully and unconditionally guaranteed by CPRL. The following tables present condensed consolidating financial information (“CCFI”) in accordance with Rule 3-10(c) of Regulation S-X. Investments in subsidiaries are accounted for under the equity method when presenting the CCFI. For the three months ended March 31, 2019
For the three months ended March 31, 2018
For the three months ended March 31, 2019
For the three months ended March 31, 2018
As at December 31, 2018
For the three months ended March 31, 2019
For the three months ended March 31, 2018
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Basis of Presentation (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2019 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | These unaudited interim consolidated financial statements of Canadian Pacific Railway Limited (“CP”, or “the Company”), expressed in Canadian dollars, reflect management’s estimates and assumptions that are necessary for their fair presentation in conformity with generally accepted accounting principles in the United States of America (“GAAP”). They do not include all disclosures required under GAAP for annual financial statements and should be read in conjunction with the 2018 annual consolidated financial statements and notes included in CP's 2018 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2018 annual consolidated financial statements, except for the newly adopted accounting policy discussed in Note 2. CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues. This seasonality could impact quarter-over-quarter comparisons. |
Accounting Changes (Policies) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Changes | Implemented in 2019 Leases On January 1, 2019, the Company adopted the new Accounting Standards Update ("ASU") 2016-02, issued by the Financial Accounting Standards Board ("FASB"), and all related amendments under FASB Accounting Standards Codification ("ASC") Topic 842, Leases. Using the cumulative-effect adjustment transition approach, the Company recognized a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Accordingly, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. In January 2019, the Company adapted existing internal controls and implemented a lease management system to assist in delivering the required accounting changes. To facilitate the transition, the Company made policy choices to utilize available practical expedients provided by the new standard, including the:
Finance leases were transitioned with no significant changes to existing balances. Operating leases with fixed terms and in-substance fixed terms were transitioned by recognizing both an operating lease liability and right-of-use ("ROU") asset. Operating lease liabilities and ROU assets were calculated at the present value of remaining lease payments using the Company’s incremental borrowing interest rate as at January 1, 2019. ROU assets were further modified to include previously accrued balances for prepayments and initial direct costs, but reduced for accrued lease incentives. The Company did not recognize operating lease liabilities or ROU assets for leases requiring variable payment not dependent on an index or rate, or short term leases with a term of 12 months or less. The standard had a material impact on the Company's Interim Consolidated Balance Sheets, but did not have a significant impact on its Interim Consolidated Statements of Income. The most significant impact was the recognition of operating lease ROU assets and operating lease liabilities, while the Company's accounting of finance leases remained substantially unchanged. The impact of the adoption of ASC 842 as at January 1, 2019 is as follows:
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Accounting Changes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impact of ASC 842 Adoption | The impact of the adoption of ASC 842 as at January 1, 2019 is as follows:
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Revenue Recognition (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of Revenue | The following table disaggregates the Company’s revenues from contracts with customers by major source:
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| Contract with Customer, Liability | Contract liabilities
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Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in Accumulated Other Comprehensive Loss (AOCL) by Component |
(1) Amounts are presented net of tax.
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| Amounts in Pension and Post-retirement Defined Benefit Plans Reclassified from AOCL | Amounts in Pension and post-retirement defined benefit plans reclassified from AOCL are as follows:
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Other (Income) Expense (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income and Expenses |
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Income Taxes (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Income Tax Expense |
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Earnings Per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||
| Number of Shares Used In the Earnings Per Share Calculation | The number of shares used in earnings per share calculations is reconciled as follows:
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Lease Expense | The components of lease expense are as follows:
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| Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases is as follows:
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| Schedule of Supplemental Information | Supplemental information related to leases is as follows:
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| Schedule of Maturities of Operating and Finance Leases Liabilities | Maturities of lease liabilities are as follows:
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Shareholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Activities Under Share Repurchase Program | The following table describes activities under the share repurchase program:
(1) Includes shares repurchased but not yet canceled at quarter end. (2) Includes brokerage fees.
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Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value and Carrying Value of Long-term Debt | The carrying values of financial instruments equal or approximate their fair values with the exception of long-term debt:
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Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||
| Weighted-Average Fair Value Assumptions | The weighted-average fair value assumptions were approximately:
(5) The Company estimated forfeitures based on past experience. This rate is monitored on a periodic basis.
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Pensions and Other Benefits (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Periodic Benefit Cost for Defined Benefit Pension Plans and Other Benefits | Net periodic benefit costs for defined benefit pension plans and other benefits recognized in the three months ended March 31, 2019 and 2018 included the following components:
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Condensed Consolidating Financial Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interim Condensed Consolidating Statements of Income | Interim Condensed Consolidating Statements of Income For the three months ended March 31, 2019
For the three months ended March 31, 2018
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| Interim Condensed Consolidating Statements of Comprehensive Income | Interim Condensed Consolidating Statements of Comprehensive Income For the three months ended March 31, 2019
For the three months ended March 31, 2018
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| Interim Condensed Consolidating Balance Sheets | Interim Condensed Consolidating Balance Sheets As at March 31, 2019
As at December 31, 2018
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| Interim Condensed Consolidating Statements of Cash Flows | Interim Condensed Consolidating Statements of Cash Flows For the three months ended March 31, 2019
For the three months ended March 31, 2018
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Accounting Changes Accounting Changes (Details) - CAD ($) $ in Millions |
Mar. 31, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
|---|---|---|---|
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
| Properties | $ 18,312 | $ 18,406 | $ 18,418 |
| Other assets | 471 | 470 | 71 |
| Accounts payable and accrued liabilities | 1,312 | 1,507 | 1,449 |
| Other long-term liabilities | 598 | 574 | 237 |
| Deferred income taxes | 3,549 | 3,515 | 3,518 |
| Retained earnings | $ 6,798 | 6,630 | $ 6,635 |
| Accounting Standards Update 2016-02 [Member] | |||
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
| Properties | (12) | ||
| Other assets | 399 | ||
| Accounts payable and accrued liabilities | 58 | ||
| Other long-term liabilities | 337 | ||
| Deferred income taxes | (3) | ||
| Retained earnings | $ (5) |
Revenue Recognition - Contract Liabilities (Details) - CAD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|---|---|
| Contract with Customer, Liability [Abstract] | ||||
| Contract with Customer, Liability | $ 73 | $ 2 | $ 2 | $ 2 |
Contract Liabilities (Details) - CAD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Contract with Customer, Liability [Abstract] | ||
| Contract with Customer, Liability, Revenue Recognized | $ 2 | $ 2 |
| Increase (Decrease) in Contract with Customers, Liability | $ 71 | |
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component - Amounts in Pension and Post-Retirement Defined Benefit Plans Reclassified from AOCL (Details) - CAD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Total before income tax | $ 573 | $ 470 |
| Income tax recovery | (139) | (122) |
| Net of income tax | 434 | 348 |
| Reclassification out of Accumulated Other Comprehensive Income [Member] | ||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Amortization of prior service costs | 0 | (1) |
| Recognition of net actuarial loss | 21 | 30 |
| Total before income tax | 21 | 29 |
| Income tax recovery | (5) | (7) |
| Net of income tax | $ 16 | $ 22 |
Other (Income) Expense (Details) - CAD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Other Income and Expenses [Abstract] | ||
| Foreign exchange (gain) loss on debt and lease liabilities | $ (45) | $ 49 |
| Other foreign exchange gains | (3) | (1) |
| Other | 1 | 3 |
| Total other (income) expense | $ (47) | $ 51 |
Income Taxes - Summary of Income Tax Expense (Details) - CAD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Income Tax Disclosure [Abstract] | ||
| Current income tax expense | $ 101 | $ 81 |
| Deferred income tax expense | 38 | 41 |
| Income tax expense | $ 139 | $ 122 |
Income Taxes - Narrative (Details) - CAD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Income Tax Disclosure [Abstract] | ||
| Effective tax rate | 24.24% | 25.92% |
| Foreign exchange (gain) loss on debt and lease liabilities | $ (45) | $ 49 |
| Effective tax rate, excluding discrete items | 25.75% | 24.75% |
Earnings Per Share - Number of Shares Used in Earnings Per Share Calculations (Details) - shares shares in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Earnings Per Share [Abstract] | ||
| Weighted average basic shares outstanding | 140.1 | 144.4 |
| Dilutive effect of stock options | 0.4 | 0.4 |
| Weighted average diluted shares outstanding | 140.5 | 144.8 |
Earnings Per Share - Narrative (Details) - shares shares in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Employee Stock Options | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Number of options excluded from the computation of diluted earnings per share | 0.2 | 0.2 |
Debt - Long-term Debt (Details) - CAD $400 million 3.125% 10-year Notes $ in Millions, $ in Millions |
3 Months Ended | |
|---|---|---|
|
Mar. 31, 2019
CAD ($)
|
Jun. 30, 2018
USD ($)
|
|
| Debt Instrument [Line Items] | ||
| Debt Instrument, Face Amount | $ 400 | $ 500 |
| Debt Instrument, Interest Rate | 3.15% | 4.00% |
| Debt Instrument, Term | 10 years | 10 years |
| Debt Instrument, Maturity Date | Mar. 13, 2029 | |
| Proceeds from Issuance of Debt | $ 397 | |
Leases (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
CAD ($)
| |
| Lessee, Lease, Description [Line Items] | |
| Operating and Finance Leases, Option to extend | P10Y |
| Operating and Finance Leases, Option to terminate | P1Y |
| Operating Lease, Residual value guarantee | $ 2 |
| Minimum [Member] | |
| Lessee, Lease, Description [Line Items] | |
| Lessee, Operating Lease, Term of Contract | 1 year |
| Lessee, Finance Lease, Term of Contract | 1 year |
| Maximum [Member] | |
| Lessee, Lease, Description [Line Items] | |
| Lessee, Operating Lease, Term of Contract | 12 years |
| Lessee, Finance Lease, Term of Contract | 12 years |
Leases - Components of Lease Expense (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
CAD ($)
| |
| Leases [Abstract] | |
| Operating lease cost | $ 22 |
| Short-term lease cost | 1 |
| Variable lease cost | 1 |
| Finance lease cost, Amortization of right-of-use assets | 2 |
| Finance lease cost, Interest on lease liabilities | 3 |
| Total Lease Costs | $ 29 |
Leases - Supplemental Balance Sheet Information (Details) $ in Millions |
Mar. 31, 2019
CAD ($)
Rate
|
|---|---|
| Leases [Abstract] | |
| Operating Lease, Other assets | $ 394 |
| Operating Lease, Accounts payable and accrued liabilities | 71 |
| Operating Lease, Other long-term liabilities | 315 |
| Finance Lease, Right-of-Use Asset | 179 |
| Finance Lease, Long-term debt maturing within one year | 5 |
| Finance Lease, Long-term debt | $ 150 |
| Operating Lease, Weighted Average Remaining Lease Term | 8 years |
| Finance Lease, Weighted Average Remaining Lease Term | 5 years |
| Operating Lease, Weighted Average Discount Rate | Rate | 3.50% |
| Finance Lease, Weighted Average Discount Rate | Rate | 7.12% |
Leases - Supplemental Information Related to Leases (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
CAD ($)
| |
| Leases [Abstract] | |
| Operating Lease, Operating cash flows | $ 28 |
| Finance Lease, Operating cash flows | 3 |
| Finance Lease, Financing cash flows | 1 |
| Right-of-use assets obtained in exchange for operating lease liabilities | $ 9 |
Shareholders Equity - Narrative (Details) - CAD ($) $ in Millions |
3 Months Ended | 5 Months Ended | |||
|---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Mar. 31, 2019 |
Oct. 19, 2018 |
May 10, 2017 |
|
| Common Shares repurchased | $ 185 | $ 318 | |||
| Current Normal Course Issuer Bid (NCIB) [Member] | |||||
| Common shares authorized to be repurchased (in shares) | 5,680,000 | ||||
| Share repurchase expiration date | Oct. 23, 2019 | ||||
| Common Shares repurchased (shares) | 707,678 | 2,890,000 | |||
| Common Shares repurchased | $ 185 | $ 753 | |||
| 2017 Normal Course Issuer Bid (NCIB) [Member] | |||||
| Common shares authorized to be repurchased (in shares) | 4,380,000 | ||||
| Share repurchase expiration date | May 14, 2018 | ||||
| Common Shares repurchased (shares) | 1,435,700 | ||||
| Common Shares repurchased | $ 318 | ||||
Shareholders' Equity - Activities Under Shares Repurchase Program (Detail) - CAD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 5 Months Ended | |
|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Mar. 31, 2019 |
|
| Common Shares repurchased | $ 185 | $ 318 | |
| Current Normal Course Issuer Bid (NCIB) [Member] | |||
| Common Shares repurchased (shares) | 707,678 | 2,890,000 | |
| Weighted-average price per share | $ 261.73 | ||
| Common Shares repurchased | $ 185 | $ 753 | |
| 2017 Normal Course Issuer Bid (NCIB) [Member] | |||
| Common Shares repurchased (shares) | 1,435,700 | ||
| Weighted-average price per share | $ 221.76 | ||
| Common Shares repurchased | $ 318 | ||
Financial Instruments - FV and CV of Long-term Debt (Details) - CAD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Schedule of Investments [Line Items] | ||
| Long-term Debt, Fair value | $ 10,175 | $ 9,639 |
| Carrying Value Measurement [Member] | ||
| Schedule of Investments [Line Items] | ||
| Long-term Debt, Carrying value | $ 8,923 | $ 8,696 |
Financial Instruments (Details) $ in Millions, $ in Millions |
3 Months Ended | |||
|---|---|---|---|---|
|
Mar. 31, 2019
CAD ($)
|
Jun. 30, 2018
CAD ($)
|
Mar. 31, 2018
CAD ($)
|
Jun. 30, 2018
USD ($)
|
|
| U.S. $500 million 4.000% 10-year Notes | ||||
| Schedule of Investments [Line Items] | ||||
| Debt Instrument, Face Amount | $ 400 | $ 500 | ||
| Debt Instrument, Interest Rate | 3.15% | 4.00% | 4.00% | |
| Debt Instrument, Term | 10 years | 10 years | ||
| Forward Starting Swaps [Member] | ||||
| Schedule of Investments [Line Items] | ||||
| Floating-to-fixed interest rate swaps, Notional amount | $ 500 | |||
| Fair value loss | $ 24 | $ 19 | ||
| Derivative, Gain on Derivative | $ 19 | |||
| Forward Starting Swaps [Member] | Net Interest Expense [Member] | ||||
| Schedule of Investments [Line Items] | ||||
| Derivative losses amortized to net interest expense | $ 2 | 3 | ||
| Derivative losses expected to be amortized to net interest expense | 9 | |||
| Net Investment Hedging [Member] | ||||
| Schedule of Investments [Line Items] | ||||
| Gain (Loss) on Derivative, Net | $ 120 | $ (151) | ||
Stock-Based Compensation - Weighted-Average Fair Value Assumptions (Details) - Employee Stock Options |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
CAD ($)
$ / shares
| |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Weighted average grant price (per share) | $ 271.84 |
| Expected option life (years) | 5 years |
| Risk-free interest rate | 2.24% |
| Expected stock price volatility | 25.05% |
| Expected annual dividends per share | $ | $ 2.6000 |
| Estimated forfeiture rate | 6.00% |
| Weighted average grant date fair value per option granted during the period | $ 63.65 |
Pensions and Other Benefits - Narrative (Details) - Pension Plans, Defined Benefit [Member] - CAD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Contributions made by the company | $ 11 | $ 1 |
| Refund of plan surplus | $ (10) | |
Contingencies - Environmental Liabilities (Details) - CAD ($) $ in Millions |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
| Site Contingency [Line Items] | |||
| Total amount provided for provisions for environmental remediation costs | $ 81 | $ 82 | |
| Term for expected payments to be made | 10 years | ||
| Purchased Services and Other [Member] | |||
| Site Contingency [Line Items] | |||
| Environmental remediation expense | $ 1 | $ 1 | |